The Zacks Analyst Blog Highlights: Verizon Communications, AT&T, Sprint Nextel, Vodafone Group and Health Management Associates
Zacks Equity Research
For Immediate Release
Chicago, IL – May 15, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeVerizon Communications Inc. (VZ), AT&T, Inc. (T), Sprint Nextel Corp. (S), Vodafone Group Plc (VOD) and Health Management Associates Inc. (HMA).
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Here are highlights from Tuesday’s Analyst Blog:
Verizon Shells Out $7B in Dividend
One of the leading wireless carriers in the U.S.,Verizon Wireless of Verizon Communications Inc. (VZ) recently announced hefty dividend returns to its stake owners. The company will payout $7 billion in dividend on Jun 25. The company’s current dividend return strengthens its market value and reflects its strong growth prospects within the wireless industry.
Verizon Wireless, a joint venture between Verizon and Vodafone became the nation's largest wireless service provider followed by AT&T, Inc. (T) and Sprint Nextel Corp. (S) after acquiring Alltel Wireless Corp. in 2009. The dividend announcement follows speculations regarding Verzion buying out the remainder of the stakes (45%) from Vodafone Group Plc (VOD).
Although nothing has been confirmed by both the companies, market rumors suggested that Verzion was less likely to pay out a dividend this time. Previously, Verizon Wireless paid out $8.5 billion in dividend to its parent companies – Verizon Communications and Vodafone – in the fourth quarter of 2012. Overall, the company made a total of $18.5 billion in dividend payment last year.
The company has a strong foothold in the wireless business and continues to capture additional market share through an aggressive deployment of the 4G Long Term Evolution (:LTE) network. This would lead to improved operating and capital efficiencies. The company is leading the industry in terms of 4G deployment.
As of Jan 22, 2013, it covered 476 markets and more than 273 million people (nearly 89% of the U.S. population). Verizon expects to convert the entire nationwide 3G footprint to 4G by this year end. Verizon introduced the in-home wireless broadband service “HomeFusion Broadband” based on LTE technology in some rural and remote homes, which do not have access to digital subscriber line or cables.
However, persistent erosion in access lines, uncertain returns from investments, iPhone subsidies and intense competition from cable companies and other alternative service providers are risks to the stock.
Verizon currently has a Zacks Rank #2 (Buy).
HMA Downgraded to Underperform
We have downgraded Health Management Associates Inc. (HMA) to Underperform in the aftermath of the company’s first quarter 2013 results.
On May 2, Health Management announced results for the reported quarter. Earnings per share of 13 cents matched the Zacks Consensus Estimate. However, net income at Health Management decreased 38.7% year over year to $23.1 million (or 9 cents per share).
Revenues (prior to provisioning for doubtful clients) increased about 2.2% year over year to $1,723.8 million, missing the Zacks Consensus Estimate of $1,744 million. Net revenues from same hospital decreased 1% to $1,470 million. Same hospital admissions and adjusted admissions dipped 8.8% and 5.8%, respectively, while surgeries and emergency room visits decreased 5.6% and increased 1%, respectively.
A rise in observation stay was a factor in the drop of same hospital admissions. Many hospitals in Florida are seeing heightened pressure from payers to put patients under observation. Overall observation stays moved up 14.1% year over year in the first quarter 2013.
Total uncompensated care (the sum of uninsured discounts, charity/indigent write-offs, and bad debt expense as a percentage of adjusted revenue) was on the higher side at 28.6% in first-quarter 2013, up from 26.1% in the prior-year quarter. Bad debt expense was 14% of revenues in the first quarter 2013, higher than 11.9% in the year-ago quarter.
Health Management tightened its guidance range for earnings per share from 86 cents to $1.01 to 86 cents to 95 cents for 2013.
The Zacks Consensus Estimate for 2013 has dropped 4.3% to 88 cents over the last 30 days. It has declined 6.4% to $1.03 for 2014 over the same timeframe.
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